We all have heard of shares or stocks but what exactly are those things?
This is only for beginners so if you already know about stocks you are probably not going to learn something new.
Let’s do it!
Stocks are basically little tiny parts of a company.
That means that if you buy stocks of a company you buy an small part of a company.
Here is a little example to make it easier for you to understand:
Let’s say a company that sells computers issues 100 shares.
If you bought one share you would own 1% of the company.
But why do companys give you the chance to by shares of their company.
The answer is pretty simple. To get more money!
Company want to grow and in order to get bigger they need more money. There are many ways for a company to get money:
One way is to borrow money from a bank but they would have to give even more money back.
Another way is to sell some shares of your own company.
When you own shares you also get some exclusive rights:
The most important one is that you have the right to get a part of the profit the company makes (the dividend).
Another way to make money with stocks is to sell them for a higher price than you got them for.
There are people who make a living out of that.
If you think that the price of a share will get higher, you buy them and hope that they will so you can sell them again.
All in all stocks are a great way to make money but never buy them without the knowledge.
Some people lost their whole fortune because of stocks because they didn’t really know much about them.
If you want to get a little more details about stocks, be sure to check this out